Is Kansas City (NYSE:KSU) a good hedge for your existing portfolios?
 | By Ellen Johnson | Macroaxis Story |
21% of stocks are less volatile than Kansas, and above 99% of all equities are expected to generate higher returns over the next 90 days. While some risk-loving traders are indifferent towards current market volatility, it is reasonable to review the risk of investing in Kansas City Southern. What exactly are Kansas City shareholders getting in August? Kansas City's low volatility may still impact the value of the stock as we estimate it as currently fairly valued. The real value, based on our analysis, is getting close to 274.60 per share.
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Reviewed by Rifka Kats
Kansas City Southern has roughly 259.9 M in cash with 1.02 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 2.86.
How important is Kansas City's Liquidity
Kansas City financial leverage refers to using borrowed capital as a funding source to finance Kansas City Southern ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Kansas City financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Kansas City's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Kansas City's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Kansas City's total debt and its cash.
Another Deeper Perspective
Kansas City Southern reported the last year's revenue of 2.61 B. Total Income to common stockholders was 618.1 M with profit before taxes, overhead, and interest of 1.41 B.
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